Pebblebrook Spends More IPO Cash with $105M Purchase of InterContinental Buckhead Atlanta
- Jul 06, 2010
July 6, 2010
By Barbra Murray, Contributing Editor
Moving forward with its post-IPO shopping spree, Pebblebrook Hotel Trust has just completed its $105 million acquisition of the InterContinental Buckhead Atlanta. The Bethesda, Md.-based REIT purchased the 422-room luxury hotel from its developer, Buckinghamshire, England-headquartered InterContinental Hotels Group PLC.
The 24-story InterContinental sits in Atlanta’s tony Buckhead community and, in addition to its upscale guestrooms, features a 5,000-square-foot wellness spa and 31,000 square feet of meeting space, making the hotel the site of the largest meeting space in Buckhead. The property is also home to a fitness center, business center, restaurant and bar. Pebblebrook plans to immediately kick off a $7 million, three-year capital improvement program.
Business between Pebblebrook and IHG does not come to an end with the closing of the transaction; IHG entered into a long-term agreement with the REIT to stay on as property manager.
For IHG, the transaction was all about strategy. The hotel group initiated a program to increase its management and franchise businesses while reducing capital intensity in 2003, and the InterContinental sale dovetails with the mission. IHG has sold 185 hotel properties around the world at an aggregate net book value of $5.3 billion since commencement of the corporate strategy.
For Pebblebrook, the acquisition was quite a deal, as IHG originally developed the hotel for approximately $115 million in 2004. The REIT financed the purchase with cash proceeds from its December 2009 IPO. And over the last six months, Pebblebrook has been scouring the country for upscale full-service hotels with upside potential with which to build its portfolio. Among the deals the company has entered into this year are the $74 million acquisition of a property in the Washington D.C./Baltimore area and the $36 million purchase of a hotel in the Minneapolis/St. Paul region.